Payroll processor Automatic Data Processing forecast annual revenue above market estimates on Wednesday, helped by strong demand for company services and new contract wins.
While mounting economic uncertainties have raised concerns over the outlook for the human resources industry, analysts say demand remains strong for companies such as ADP thanks to a stable labor market.
The company expects its revenue to grow between 6 per cent and 7 per cent in fiscal 2024, compared with analysts’ expectations of a 5.8 per cent increase, according to Refinitiv data.
“New business bookings were incredibly strong and employer services retention returned to a record level, underscoring our strong market position,” said Chief Executive Maria Black.
The company’s full-year adjusted earnings per share growth forecast of 10 per cent to 12 per cent was also above analysts’ estimates of a 9 per cent rise.
Shares of ADP were 1 per cent higher in premarket trading. The stock is down nearly 5 per cent this year, underperforming the S&P 500’s 19 per cent gain.
The company’s revenue rose 8 per cent to $4.48 billion for the three months ended June 30, compared with estimates of $4.39 billion, driven by its employer services business, which provides human resource outsourcing and makes up 67 per cent of total revenue this quarter.
On an adjusted basis, the company earned $1.89 per share, compared with estimates of a profit of $1.83 per share.
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